Should I withdraw from my retirement accounts?

We are finding ourselves afraid to go into debt after our baby, but need to pay for daycare costs and course tuition to renew my nursing license. (Total would be around $10K). It will be a few months before I start making money again and we have nothing to spare and are barely able to stay afloat paying for kids in braces & sports, the mortgage, health insurance and all the usual bills.

Does it make sense to withdraw from our retirement accounts here?

Debt, Retirement
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August 2017
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Hi!  Thank you for writing and congratulations on your baby.  How exciting for you!  I hope you are enjoying parenthood with this baby and the others I think you have (the ones in braces and sports!).  Ours are 26 and 30 – we loved being parents so much and wish we could go back and do it all over again.  We don’t have grandkids yet, but luckily we get to see a lot of our kids!

The other advisors have great advice, and I’d like to add to it.  Since you mention daycare costs, I’m assuming that you are still working but that maybe you are not working full time and that’s why you are having some financial difficulties.  If you are still working and your retirement account is a 401(k), you could borrow from the account instead of withdraw.  That way you don’t have any penalties or tax burden. Assuming you do get back to nursing, you’ll be able to get a good-paying job and pay your loan back.  If the money is in an IRA, you can’t take out a loan. In that case, if you withdraw the money (assuming you are younger than age 59 ½, you’d get hit with the 10% penalty plus having to pay tax on the money).

Another thing to look into, depending on how much you make in a year, is that you may qualify for Pell grant or other grants or low-cost loans to pay for going back to school for your license. Go over to the admission department of the school or schools you are looking at and they will help you figure out what financial aid you can get. Keep in mind, too, that you may be eligible for education tax credits to which won’t save you right now but will save you in the future.

I’m sorry that things are tough now financially.  I applaud your desire to re instate your nursing license…that will be worthwhile and will mean higher pay and steady work going forward.  Please write again if you need more info.  Best wishes to you!



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